How to improve Photoshop performance
Here are few quick tips on how to speedup Photoshop on your Mac (without buying a new computer).

The #1 method of improving Photoshop performance, regardless of version and type of your Mac, is to add more memory (RAM). You should have a minimum 4GB of RAM these days. 8GB or more won't hurt. Photoshop runs best when entire image is loaded to RAM. When there is not enough RAM it will start swapping image data to and from the hard drive which will result in huge slowdown. The system itself may also be affected by RAM shortage and your Mac will slow down often to a crawl. There are memory settings in Photoshop, described below, that can make Photoshop take advantage of more memory. Adding more RAM often gives drastic speed boost to Photoshop. For example going from 1GB to 4GB and tweaking Photoshop settings will feel like running Photoshop on a new computer.

The #2 method is to add another hard drive to be used either to work on your files or to be assigned as a scratch disk to Photoshop. When Photoshop does have to swap image data to a hard drive is a good idea to assign a separate disk for that. This will improve the speed as a separate hard drive will perform under less stress and will be less busy doing other stuff than your main system drive, therefore it'll be more responsive to Photoshop's requests. Just don't use external USB drives for that. USB is too slow for this job. FireWire drives will be OK (and the only option for laptop and iMac users), but internal hard drive is best for this job. Although this method doesn't yield drastic speed improvements as adding more memory will do.

The #3 methodis to run the proper version of Photoshop for your Mac. If you have a G5 computer or older you can pretty much run all versions but on lower-end G5s (1.8GHz) and G4s you may be better off with CS2 as CS3 and CS4 are more demanding. On newer Intel Macs you need to be running CS3 or higher. CS2 will run in emulation on Intel Macs and will be very slow. Actually, CS3 will run slower on a MacPro than on an older G5.

Below you will find a few CS3 Preferences setting that may help as well.
Navigate to /Applications/Adobe Photoshop CS3/Plug-Ins/Bigger Tiles and locate the ~Bigger Tiles.plugin
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This is a Photoshop extension that is disabled by default: the "~" character prevents it from loading. On a fast computer with lots of RAM enabling this plugin will make Photoshop process image data in larger chunks, therefore, making it faster. To enable it remove the "~" character and restart Photoshop.

Don't bother with this setting if you have less than 4GB of RAM and a slow computer (1.8GHz G5 or slower)
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Now go to Photoshop Preferences and select Performance…
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Here you will find a few settings you can change. Photoshop needs to be restarted for these changes to take effect.

Memory Usage - the amount of memory (RAM) allocated to Photoshop. It will use maximum this much memory. Two things: First, Photoshop will not grab all this memory immediately but only when needed. So this RAM will be available to other programs if Photoshop doesn't use it up. Second: Photoshop plugins are standalone processes that use their own RAM allocation. Therefore, the combined RAM used by Photoshop and plugins will be higher than Photoshop alone. It is recommend that the allocation doesn't exceed 60% of system memory. Therefore, on a system with 4GB (4000MB) of RAM you should assign maximum around 2400MB.

Scratch Disks - here you can assign another hard disk for Photoshop to use as Scratch and uncheck the system disk.

History & cache - this is basically the number of undo steps in Photoshop. The larger this number the further you can go back but the more RAM is used.

Cache Levels - this number affects the speed of image redraws on the screen as you edit it. The higher the number the faster the screen redraws for larger images but the lower the image quality. Also, with high number Photoshop will take longer to open files, so this one is a tradeoff. if you work on small images (few MB) lower the number to increase speed. If you images draw on screen slowly then increase it.

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You can test and monitor your Photoshop performance to see if your tweaks bring desired results by looking at Photoshop Efficiency. If the Efficiency is low that means Photoshop is starving for RAM and using hard drive to swap image data.
The efficiency indicator is available from the pop-up menu on the status bar of your image. By default it shows the image size. To switch to Efficiency click on the little triangle as shown on the image…
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Go to Show and select Efficiency
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Now the indicator shows the Efficiency. Use this to set the optimal memory settings in Photoshop.

If the Efficiency indicator shows 95%-100% all the time that means the images are processed entirely in RAM and there is no need to increase the RAM allocation.

If it shows values below 95% then the image data is being swapped to the disk and Photoshop could use more memory.

Keep in my mind that giving Photoshop too much memory doesn't take it away from other programs unless Photoshop really needs it. So it's better to assign too much than too little. in particular if you have lots of RAM available.
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if you want to read more go to this article on Adobe website.

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